BT and Sky to scrap joint marketing deal

BT and Sky may be forced to ditch their joint marketing agreement once the satellite broadcaster acquires broadband ISP Easynet.

The pair have been plugging each other's products for a couple of years now in a bid to try and offer a "triple play" service to rival cablecos NTL and Telewest. BT punters were offered promos to join Sky, while Sky offered its viewers money-off to hook up to BT's broadband service.

That working partnership now looks under threat. Having pledged to spend £211m to acquire local loop unbundling ISP Easynet it seems odd that Sky would also be happy to market a broadband product of rival BT.

BT execs are understood to be lining up a meeting with Sky early next week to thrash out the problem. One insider admitted privately that there is a question mark over the future of the relationship and that the arrangement may have to be scrapped once the two companies become rivals.

Despite this, BT believes Sky's sudden move into the UK's broadband sector is more of a concern for the cablecos rather than BT. Playing down the threat posed by such a huge player as Sky, BT bigwig Gavin Patterson said: "We see this largely as a challenge to the cable companies. If Sky win customers from those companies BT will benefit as they will be connected over the BT network.

"Next year BT will launch the only national TV over broadband service, which will offer video on demand and time-shifted TV to the whole country, rather than the patchwork of cities and large towns covered by any LLU operator."

While Eric Tveter, president and COO of Telewest chipped in: "We have built up a successful base of broadband customers in both residential and business markets, over the past five years.

"Increased competition is good for customers and we can understand why Sky wants to follow our lead, but it's early days and we have yet to see evidence of how they will match our triple play." ®